Is supporting adult children affecting your retirement plans?

Becoming a parent is a lifelong commitment. Your children may go to college, buy a house, and start a family. But ultimately, your child support obligations may be more or less permanent. This can extend to providing financial support even if your child is at an age where he or she could theoretically pay for it on his or her own.

However, supporting your grown children financially has the potential to ruin your retirement plans. So if it’s something you’ve been doing out of habit, you may need to rethink the situation.

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You don’t want to come up short on your nest egg

It’s easy to see why today’s young people are struggling financially. Many people have student loan debt, which can be difficult to pay off even if you are earning a fairly generous wage. With huge housing costs, it’s no surprise that many young adults have trouble paying their bills.

But the problem is that according to a recent Pew survey, only 45% of young people ages 18 to 34 said they were completely financially independent. So it’s not shocking that 59% of parents say they have helped their children financially in the past year.

If you fall into the latter category, you probably think your kids are doing the right thing. And helping them through their teenage years is certainly a noble thing to do. But one thing you really don’t want to do is compromise your long-term financial security to fund your child’s expenses when he or she could technically go out and earn money on his or her own.

If you’ve already maxed out your 401(k) or IRA and have some money to spare, one option is to invest a few hundred dollars each month to help your grown children pay rent or mortgage. But many people who are slowly but surely approaching retirement are not in that boat. And honestly, if you’re at all concerned about how much retirement savings you have, you should absolutely put your own needs first and make sure your children come second from a financial standpoint.

Borrowing money is not ideal. However, if your child needs to take on some debt to cover living expenses until their income increases, let them take on that burden rather than taking funds out of the cash reserves that should be earmarked for retirement.

Once your career is over, your options for making money can be quite limited. On the other hand, your grown children will probably be working for decades. So, if you can’t cover your expenses based on your income (or if you can’t reduce your expenses enough to get a paycheck) them Be the one to take financially risky steps. In this case, it’s about taking out a loan or holding on to your existing debt a little longer.

Financial help now may be a burden on your child later

If you’ve worked hard your whole life, you deserve to retire without financial stress. However, if you invest too many financial resources into helping your grown children, you may not reap the benefits.

Additionally, limiting your nest egg contributions now to fund your grown children’s lifestyle could put you in a really bad situation once retirement begins. At that point, you may have to ask your child for financial support, which is not a good situation for anyone.

Being a young adult today isn’t easy, and it’s easy to see why your grown children may feel financially stressed. What if you could afford to help them out while continuing to fund their IRA or 401(k) to the max? Otherwise, you may want to limit the support you give them to support for the moral variety.